Qube squares its accounts and more

Qube Logistics

Little-known
Qube Logistics
jumped to its highest level in over two months when it reported a sharp turnaround in profitability for 2009-10 that exceeded analyst expectations.

The turnaround follows a restructuring resulting from a merger between Qube’s former structure, KFM Diversified Infrastructure and Logistics Fund, and sister company Kaplan Equity.

Qube’s transformation isn’t complete as it is looking to shed its fund management structure and emerge as an operating company with infrastructure and logistics assets across Australia and New Zealand.

Chris Corrigan
, with some of his lieutenants from the former Patrick Corporation, is behind the transformation. Patrick was sold to Toll Holdings in 2006. Once Qube becomes an operating company, in six to 12 months, Mr Corrigan will be chairman of the board.

Things appear to be running according to plan for Qube, if its full-year result is anything to go by. Qube turned in a net profit of $24.3 million for the year ended June 30 on investment income of $37.7 million. The business posted a net loss of $12.5 million and a negative top-line of $6.6 million in the previous year due to the financial turmoil.

The result exceeded CCZ Equities Research’s forecast of a net profit of $18.2 million and top line of $25.3 million. The Sydney broker is urging investors to buy the stock with a price target of $1.05 and forecast yield of 3.5 per cent.

Qube jumped 1.2 per cent in early trade to 86¢. If the stock finishes up today, it will be its third straight day of gains.

Related Quotes

Company Profile

ARB Corporation

Four-wheel-drive accessories supplier
ARB Corporation
also gave investors reason to cheer when it posted its 18th straight year of revenue growth on Wednesday.

The stock enjoyed its best one-day jump since November, of 6.9 per cent, and gained another 1¢ in early trade yesterday to $6.21.

Sales climbed 19.7 per cent to $230.3 million as net profit surged 44.8 per cent to record $32.6 million. This impressive result speaks to the quality of its management team considering the challenging operating environment it had to endure over the past 12 months.

These included a sharp economic slowdown in its US and Europe markets, volatile consumer sentiment, a cutback in capital expenditure by miners who buy ARB’s products for their trucks and riots in Thailand where its factory is based.

Macquarie Equities Research said investors would struggle to find a better result this reporting period as margins and operating cash flows also improved dramatically. The broker rates it “outperform", with a price target and forecast yield of $7.30 and over 4 per cent.

Blackmores

Another emerging company to post growth is health supplements company
Blackmores
. The stock firmed 0.5 per cent to $23.27 in early trade on a 16.9 per cent jump in 2009-10 net profit to $24.3 million – ahead of estimates on a 7.3 per cent increase in sales to $215.8 million that was below expectations.

Consensus estimates had pencilled in a net profit of $23.6 million and revenue of $225.8 million.

LINWAR Securities was not overly impressed. It noted that domestic revenues in the second half grew just 3 per cent, with cost controls helping to pad the company’s bottom line.

Management also didn’t give much away in terms of an outlook, although brokers are expecting low double-digit net income growth for the current financial year.

There are also questions about how much further the stock could climb given that it is trading on a one-year forward price-earnings multiple of around 14 times and earnings growth is expected to slow to around 7 per cent to 8 per cent over the next few years.

LINWAR rates it “market perform", with a price target of $25.

Industrea

Industrea
’s better than expected profit growth was not enough to push the stock above its 36¢ resistance line that has capped the price since late April.

Management reported a 21 per cent jump in revenue to $313.2 million and an 8 per cent lift in adjusted net profit to a record $49.1 million, compared with consensus expectations of $322.2 million and $45.4 million.

While sales of its safety mining equipment disappointed, its bottom-line result would have been even more impressive if its recent tax win was considered, as that is worth another $20.2 million. Management also gave an upbeat outlook as it anticipates growing demand for its diesel and technology products from Chinese and Asian miners.

The stock firmed 0.5¢ to 34.5¢ in early trade but investors seem a little reluctant to get overly excited by the earnings news, in part due to ongoing concerns about the company’s debt profile.

While management has used its strong operating cash flow to pay down net debt to $181 million (including its convertible bonds obligations) from over $200 million from a year ago, that is still a significant figure in contrast to its market capitalisation of $325 million. However, the company doesn’t seem to have trouble winning the backing from its banking syndicate.